JP Morgan tokenizes euro deposits soon. Looking at NFT opportunity – Ledger Insights
JP Morgan already enables tokenized US dollar deposits with JPM Coin. Now it plans to enable blockchain-based euro deposits “soon,” said Basek Toprak, head of Coin Systems at Onyx by JP Morgan.
On another related topic, JP Morgan sees a payment opportunity for NFTs. “The technology today is not friendly enough for mass adoption,” said Brody Mulderig, who covers Fintech at JP Morgan, speaking at the Crypto Assets conference.
He went through all the hoops some users have to jump through to buy an NFT. If they are not already involved in crypto, the easy part is transferring money to a crypto exchange. But then users have to transfer it to a self-managed wallet, buy hardware to make sure it’s secure, and then buy NFT. They also need to be wary of phishing scams and the risk of losing their wallet seed phrase.
Some consumer-focused NFT applications already remove friction by accepting card payments for NFTs. Dapper Labs is one, and Mulderig mentioned Sorare, the Softbank-backed fantasy sports NFT platform, based in France, which now has deals with a number of soccer leagues, MLB, the NBA and the PGA Tour.
JP Morgan is clearly chatting with some music NFT platforms about enabling fiat payments. It also looks at the potential of web3 more broadly, which it considers to include all applications not directly related to finance.
Most blockchain financial applications reside under JP Morgan’s Onyx division. This includes Onyx Digital Assets with an intraday DLT repo application, Liink for messaging around conventional payments and JPM Coin. It is also experimenting with using JPM Coin on a public blockchain as part of Project Guardian, its Singapore DeFi experiments with the Monetary Authority of Singapore.
JPM Coin for Corporate Treasurers
Regarding JPM Coin, Toprak emphasized the difference between programmable payments, which already exist, and blockchain-based programmable money. For businesses, many banks already offer non-blockchain trigger payments.
Tokenized money on a blockchain creates efficiency because it acts as both a record of value, enables money movement and supports programmability. That contrasts with the current state of money, which exists electronically in a bank database with separate payment rails to transfer money. This creates inefficiencies in moving money between the ledger and the rails.
Blockchain eliminates reconciliations because both parties have access to the shared ledger.
Whereas previously one company could push a payment or another request a payment, with blockchain programmable money, the two parties mutually agree on what data will trigger a transfer in advance.
She sees port payments as a good example where a ship entering a port should not pay port fees too early because it could change its route. If it leaves the payment late, the unloading of goods may be delayed. Instead, by using GPS, payment timing can be optimized and automated.
Another JP Morgan executive Veronique Steiner spoke about the value of automation for corporate treasurers. During weekends and holidays, tellers need to keep excess liquidity buffers, and automation can make a big difference. This applies to triggers linked to the point of service, delivery of goods, movement of currency or margin calls.
One point not discussed is the richness enabled by smart contract programmability. So we expect programmable money to be able to handle more complex situations compared to simple trigger payments. On the other hand, it must be kept reasonably simple to avoid mistakes.
Coin Systems’ Toprak described a path towards public blockchain payments as an expanding circle. In the centre, JPM Coin enables payments via a shared ledger in the bank. JP Morgan is also part of Partior, a Singapore joint venture for interbank blockchain payments, so a shared ledger between banks.
“The future is universal,” she said. “We’re slowly getting there. Web3, public blockchain, these will be possible over time. (We’re taking) small but important steps.”
